BUS604: Innovation and Sustainability

While it would be a big step to have a European foreign policy, energy remains a global foreign policy issue and an expression of global power. Beyond national interests and processes we are currently unable to develop a coherent European energy policy, but to do so globally is even more difficult. Does van de Veer agree that the global political field of energy is often underestimated?

"There are two strong global aspects to energy. The first is the IPCC report on climate change.2 The second is the IEA, the International Energy Agency in Paris, which is more focused on availability and its effect on the political dimension. The IEA updates its World Energy Outlook annually, and the IPCC revisits its assessment report every six years. If you use those two as a basis, then you have enough overall, let's say think tank, capability in order to form a real European policy.

"On the matter of climate change - what would be the outcome if we were super-clean here in the Netherlands? Imagine that on the A of acceptable we do a perfect job, but our electricity prices have become so high that we can't compete. Then we are out-competed by products from China based on coal- fired power. That is one extreme.

"The problem is that we now have a country policy, and we need to get it to a regional policy. For that you need new Kyotos, new kinds of agreements, to solve this second problem.

"But don't underestimate the Chinese. While they still build a lot of power stations and they still build new coal-fired power stations, many of the new ones are running on gas. So they do react and of course very much helped by all the problems they have, especially in Beijing with the air pollution that brings it pretty close to home for them.

"So to take one step back - for climate change we need global coordination to a certain degree to do something about that CO₂. If you take it to a higher abstraction level, then coal should eventually be left in the ground, because per kilowatt-hour it generates by far the highest Co₂. So if you look from a global perspective, it is probably the lowest-cost solution to minimise the use of coal.

"Now in all projections over the last 10 years, the use of coal has grown more than all the renewable energy sources. And that may happen again. So coal production is still on the increase. And every additional ton of coal ends up in Co₂ as well. So the first challenge is to stabilise the use of coal or even to force a reduction. These are large problems that require large-scale solutions. With all due respect, wind turbines next to your farm will not solve that.

"What then are your options? Your options are nuclear and gas. Gas is not perfect but there is a lot of it, it is relatively easy to extract and quick to distribute. Shale gas in the US is driving out coal there. But in Europe the problem is that the price of our gas is much higher than coal. What is then your option? There is the ETS, the European Trading System, or a tax on CO₂, or a tax specifically on coal. But that can only work if you do it within at least a European context. Otherwise one doesn't have a level playing field for the industry.

"If you look at Availability, you come to the role of the Middle East. There are still huge gas reserves in the Middle East, e.g. in Iran and Qatar. They are huge and will be for many, many decades. When I started to work for Shell, we thought that the world's gas reserves would last for 20 to 30 years. Now we think they may last 200 years. Nobody knows.

"But gas is not evenly spread. So you cannot avoid geo-political thinking. And that is why it is not up to the industry to choose the energy mix for a country. In the end, it is always a political choice".